Max McGraw Chair in Management and the Environment; Professor of Management & Organizations
What factors determine whether a boycott will succeed in changing the behavior of its corporate target? And how can activists attack the weak points of their adversaries most effectively? A study by Brayden King of Kellogg’s Management & Organizations department seeks to answer those questions. His short answer: “Activists seeking to create corporate change are partly dependent on the conditions of the company they’re targeting. It has to be vulnerable to change to have any transformative effect.”
Boycotts have been described as the weapon of the weak, since secondary stakeholders generally use them in efforts to instigate change. However, King’s research offers a position of strength to otherwise marginal actors, identifying two conditions that predispose boycotters to be able to shape and constrain their more powerful corporate targets and win concessions. King’s results reveal that companies that have experienced a decline in public reputation are more susceptible to boycotts, and that the more media attention a boycott receives, the greater its effectiveness will be.
Successful Boycotts: A Venerable History
Activists began to use boycotts even before 1880, when Irish employees refused all collaboration with ruthless English land agent Captain Charles Cunningham Boycott, thus giving the action its name. In 494 BC, plebs protested their harsh treatment by the patricians whom they served by packing up and leaving Rome. They returned only when their bereft masters gave them concessions. Recent successes include the Montgomery bus boycott of 1955 that helped launch the civil rights movement and the United Farm Workers’ grape boycott in the late 1960s that won bargaining rights for farm laborers in California and other Western states. In May 2001 Toyota Motor Corporation canceled a television advertisement that depicted an African-American with a tooth inlaid with a Toyota insignia after the Rainbow Coalition accused the company of reinforcing negative stereotypes and threatened a boycott. Toyota responded further to the threat by extending its relationships with minority-owned businesses.
Companies that have experienced a decline in public reputation are more susceptible to boycotts.Trained as a political and organizational sociologist, King brought his interest in social change and the role of activists to a key question about boycotts. “Substantively, I’m interested in understanding why they are effective,” he explains. “A lot of research in the past has shown that they don’t necessarily affect their targets’ bottom lines that much. And it’s not clear that boycotts affect consumer behavior very much. But those boycotts that get some level of media attention are relatively successful in terms of getting some sort of concession out of their targets.”
Media, Dropping Sales, and Reputation
King started with five hypotheses about boycotts. Three made more general assertions that corporate targets are more likely to concede to boycotts when high levels of media attention are generated, the corporations have suffered a decline in sales revenue, and the corporations have experienced a decline in reputation. The remaining two sought to pinpoint more specifically the interaction effects between media attention and sales decline on the one hand and media attention and reputation decline on the other.
To test the hypotheses, King examined boycotts against elite, publicly traded corporations reported in five geographically distributed national American newspapers between 1990 and 2005. He then set out to discover why 53 of the 144 firms in the sample conceded to the boycotters’ demands.
It is “reasonable to assume that corporate decision makers viewed boycotts as a more serious threat to their reputation than to their sales revenue.”
His findings confirm his hypothesis with respect to the importance of the media, but with a surprising twist. As predicted, boycotts are indeed more likely to exert influence when they receive a great deal of media attention. Interestingly though, his results indicate that even with media coverage, previous sales declines have statistically insignificant bearing on whether a boycott will ultimately bear fruit for activists. Instead, the real power of a boycott lies in its ability to inflict damage to corporate reputation. King observes that corporations that struggle with their public image are more likely to take boycott demands seriously, whereas corporations with strong reputations feel more impervious to such demands and are more likely to “stick to their guns” regardless of sales levels. Thus, he calls it “reasonable to assume that corporate decision makers viewed boycotts as a more serious threat to their reputation than to their sales revenue.” This finding, he continues, “helps make sense of previous studies that have questioned why boycotts are ever effective, given that most boycotts do not involve large numbers of participants and do not usually have a large impact on the sales of the corporate target.”
“Boycotts may not need to affect sales at all in order to be effective,” he writes. “Rather, boycotters’ influence stems from their ability to make negative claims about the corporation that generate negative public perceptions of the corporation. Hence, corporations that are already struggling to maintain their previously positive reputations will be more likely to concede to boycotts and quell any further damage the boycott may do to their reputation.”
King notes that the study has one ironic conclusion: “Companies with poor reputations to begin with are less vulnerable to boycotts, because they have less to lose.”
Advice for Both Boycotters and Companies
What lesson does the study hold for potential protestors? “Choose your company carefully,” King advises. “The best targets are companies with good reputations that are on the decline. Of course, activists don’t always have a choice. But if they can choose among various companies, choose those with a public image crisis.” King has one other critical piece of advice: “Have a plan to involve the media from the very beginning,” he says.
What can companies who are potential targets of activism take from this research? “They need to be aware that they are responsible to stakeholders, and their reputation is an important and valuable asset,” King points out. “Companies that haven’t done the best to nurture their public image in the past are the ones that can lose their autonomy in their decision making. They need to be active about the management of their public images.”
More on this research in Professor Brayden King’s blog at orgtheory.wordpress.com/2009/04/04/how-protests-matter/.
King, Brayden G. (2008), “A Political Mediation Model of Corporate Response to Social Movement Activism,” Administrative Science Quarterly, 53(3): 395-421.